Street vigil on polls melts stocks as fear gauge rises
Nifty, Sensex fall most since January; bearish bets signal longer correction
Election jitters and uninspiring earnings combined to spook the stock markets on Thursday, sending benchmark indices crashing by the most in more than three months.
Amid steep volatility, expiring weekly index options and foreign investor selling, the bellwether Nifty plunged 1.55% to 21,957.5, its biggest single-day fall since 17 January, while the Sensex fell 1.45% or 1,062 points to 72,404.17, its worst since 23 January.
Nifty's top five losers alone accounted for almost three-fifths of the index’s 345-point fall. Foreign portfolio investors (FPIs) net-sold a provisional ₹6,994.86 crore worth of shares.
The correction may not be over yet, either: huge bearish bets on the Nifty and Bank Nifty futures contracts signal that the decline may extend till the end of the month. The nervousness on the Street was reflected by fear gauge India Vix closing at a 20-month high of 18.2.
The broader markets saw worse: Nifty Smallcap 250 fell 2.65% to 15,006.35, while the Nifty Midcap 150 tumbled 1.74% to 18,245.35.
22,224.8
India VIX 17.08
Nifty 50
BALLOT BLUES
NIFTY’S top five stocks accounted for three-fifths of its fall 18.2
FALL coincided with Thursday’s weekly Nifty options expiry
Domestic institutional investors net-purchased a provisional ₹5,642.53 crore, but selling by retail and high-net-worth investors added to the selling pressure. On BSE, this category net-sold shares worth ₹118.10 crore, while figures on the National Stock Exchange (NSE) were not available. Investors saw their total wealth being eroded
21,957.5
SMALLCAP, midcap indices fall 2.6%, 1.7%; Vix at 20-month high by ₹7.28 trillion.
“The pullback is because of creeping uncertainty about the victory margin of the incumbent and in-line results amid lofty valuations across many pockets of the market,” said Andrew Holland, chief executive of Avendus Capital Public Markets Alternate Strategies. Holland expects the pressure to persist until the votes are counted.
However, other analysts expect limited downside for the Nifty, with the index having pulled back 3.7% from its record high of 22,794.7 on 3 May.
Gaurang Shah, senior vice-president, Geojit Financial Securities expects the market to find support at 21,800. He said short- to medium-term investors should book profits while those in “for the long haul” should use the correction as a buying opportunity .
“A correction before the event is good for the markets. I am bullish on power, defence, banks, NBFCs (non-banking financial companies) and autos that are good buys,” he added.
HDFC Bank contributed 60 points of the Nifty’s fall, L&T 57 points, Reliance Industries 37.5 points, ITC 31.98 points and Asian Paints 14 points.
Ajay Bagga, independent market expert, attributed Thursday's fall to “no perceptible wave in the elections, a mediocre earnings season, overhang on key sectors like IT and financials, as well as sustained FII outflows. All these have contributed to India Vix shooting up over the last 11 days. The price action has